The world's top electronics makers are rallying around an operating system--and it's not Windows.

It's getting harder to tell the difference between the hardware in the living room and the den. Devices for playing music and movies and for storing and displaying photos are beginning to resemble personal computers, and vice versa. This so-called convergence just took another giant leap in the fall at two Asian trade shows--one for the PC industry, in Taiwan, and the other for consumer electronics makers, in Japan.

Both shows promoted proud little boxes with big hard drives and fast microprocessors. They can store and play back hundreds of hours of video, make DVDs, archive digital photographs, play music, e-mail, access the Internet and more. All this can be done using a remote control and, the makers claim, without having to read the manual. These boxes are ushering in the day when PC shoppers may figure they no longer need a PC. The screen in the living room will suffice.

That's opening a rift in the software business among purveyors of operating systems to run the multimedia home. Right now things are not looking good for Microsoft. The boxes at the show in Taiwan, the world's PC manufacturing hub and a land loyal to Bill Gates, run on Microsoft Media Center software and Intel microprocessors. They cost around $1,000, in part because of the high costs of the operating system and the processor. Most are made by small firms that have yet to sell significant quantities.

In Japan the boxes, called hard-disk recorders, are made by Sony, Matsushita, Toshiba and others. They use specialized chips running either the open-source Linux operating system or proprietary systems. They cost between $400 and $800, and Japanese firms sold 1.4 million of them last year, with 5 million more expected to sell in 2004. Almost none run on Windows.

All the electronics giants--including Samsung, Sony, Matsushita and Philips--have united behind Linux and plan to phase out their proprietary systems. The Taiwanese PC manufacturers have been hedging their bets by combining Linux and Windows in many of their new entertainment PCs. Even Microsoft gave ground, agreeing in September to develop software to run on the Tron operating system favored by many Japanese electronics firms and car companies.

To Matsushita (see story) and Sony, and to many PC makers, Windows and Intel technologies are not fundamentally suited to the audiovisual life, which customers expect to be as easy as pushing a button to start the music, as opposed to waiting 90 seconds to boot up. Mitac International, a large Taiwan-based PC manufacturer, uses Linux to run a big chunk of its new audiovisual PC. "You can get high-quality video and audio in seconds. We short-circuit the boot process using Linux," says President William Ho.

Also, it's cheaper to use alternative chips and Linux, an operating system developed for free by a loose global confederation of programmers. "As the price of a PC falls, the portion of the cost that goes to Wintel is rising," says James C. Chen, a vice president for Acer, another big PC maker. "It costs $65 for Windows and $2 for Linux," he adds.

Over time all sorts of consumer products will connect to one another and the Internet using Linux, says Kunio Nakamura, president of Matsushita, the world's largest consumer electronics company. "We will be able to use mobile phones to control the TV set," he predicts.

Linux does require more sharing of trade secrets. Recently Toshiba came out with a Linux-based portable music player and was asked by Taiwanese and Chinese would-be clonemakers to reveal the code used. "Since Linux is open, we will reveal the code to anybody who asks," says Toshiba spokesperson Midori Suzuki. Toshiba will differentiate its product with superior hardware, she says.

Microsoft has moved quickly to address its critics. "I am not saying you want to be clicking around with your mouse when you are watching your TV; people want a remote control. We have been looking at this very closely," says Jonathan Usher, director of digital media for the software giant's TV group. Microsoft has been working on instant-on capabilities and subsets of its operating system small enough to run simpler consumer electronics devices. Yet the firm is insistent on the primacy of PCs. "The Windows PC has emerged as a fantastic place to discover, download and manage all sorts of media. For many, the PC is already an entertainment device," he says.

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